ARF Pension Solutions

ARF Pension Solutions

ARF pension solutions are post-retirement investment plans for the investment of your accumulated pension pot. As opposed to using your fund to buy a pension for life (known as an annuity) an Approved Retirement Fund gives you the flexibility to remain invested whilst still drawing down an income, you manage and control your retirement pot and can invest it in a wide range of different investment funds.

ARF Pension Solutions – Approaching Retirement

When it comes to drawing down your pension plan benefits and investing in an ARF, you must take out an AMRF if you do not have a guaranteed pension income for life of at least €12,700 a year already in place or have not used €63,500 to buy a pension for life.

The main difference between an AMRF and an ARF is that, until you are 75 years old or you become in receipt of the required guaranteed pension income from other sources, you may only withdraw any gain you make within the AMRF over and above the original amount you invested but cannot make withdrawals from the original amount invested.

If you have a number of pension plans from previous employments, you can take a tax-free lump sum of 25% from each up to a maximum total of €200,000 and then invest the balance in your AMRF/ARF.

Is an ARF Right for You?

If you were a member of a Defined Benefits Occupational Pension Scheme, then you need to think carefully and get professional financial advice before opting to go the ARF route. A Defined Benefit pension, as opposed to a Defined Contribution pension, promises a set level of pension based on your past salary and company service, may possibly be the better option for you, dependent on your personal circumstances.

Some Defined Benefit Pensions have a lesser spouse pension built-in if were to die whilst in receipt of your pension, but unlike with an ARF, your fund cannot be passed on to your children after you die.

Why choosing the right ARF adviser is paramount

A Financial Broker is best to allow for full market comparison, but talk to more than one before signing any paperwork, this is a big decision and should not be rushed or allowed to be pressured.

Qualifications and experience should be a given and all financial advisors must match your investment risk profile to your chosen funds, so don’t be impressed by what’s actually standard.

Also, if your considered adviser emphasizes the size of their “funds under management” this just means they are good salespeople, as its the Fund Managers who actually manage the funds the broker or adviser just monitors their performance and your ongoing investment risk profile.

What to really focus on:

(A) Fund Choice

ARF’s can be invested in various assets such as shares, property, bonds, and cash. The growth of your ARF fund depends on the performance of these chosen assets and choosing multi-asset funds allows for diversification. Again, all financial advisers must carry out an investment risk profile analysis before recommending suitable funds, with financial brokers offering the broadest choice.

(B) Past Fund Performance

Risk and reward are directly correlated, so the lower the risk the lower the return and vice versa. Carrying out a risk profile analysis will ensure that you choose appropriate funds and whilst past performance is a good indicator of future performance, it is never guaranteed!

(C) Fund Charges

The fund managers of your chosen funds will take an annual management charge known as the AMC, but it’s very important to understand that your financial adviser’s remuneration will affect its level, so choosing the wrong adviser will cost you long term!

Read more about ARF fund changes.

ARF Pension Solutions – Personal ARF advice:

Contact: Ken O’Gorman – Director – QFA – Pensions & Investment Specialist – One Quote Financial Brokers on: 01 845 0049

Remember there is no charge for initial advice or quotes nor any obligation to proceed!

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